Fears over Iranian oil exports send crude prices soaring

Iran has warned that it could cut off oil exports to six European countries in retaliation for the latest sanctions imposed on the regime, causing turmoil in the world’s crude market.

Iran’s state-run English language television, Press TV, initially reported on Wednesday that Tehran had stopped exporting oil to the Netherlands, Greece, France, Portugal, Spain and Italy, which resulted in oil prices jumping up as much as a barrel.

But officials from the country’s foreign and oil ministry scrambled to correct earlier accounts, saying Iran had merely invited ambassadors of the six countries to a meeting to warn them of the possible consequences of their latest decision to put an embargo on the imports of oil from the Islamic republic.

“We deny this report … If such a decision is made, it will be announced by Iran’s supreme national security council,” a spokesman for the country’s oil ministry said.

Hasan Tajik, a senior official at Iran’s foreign ministry in charge of its European affairs, appeared to clarify the situation later, telling the Irna state news agency that Iran had warned Europe that it would find other customers for its oil should the west insist on the sanctions.

“European people should know that if Iran changes destinations of the oil it gives to them, the responsibility will rest with the European governments themselves,” he said in quotes carried by Irna.

In recent weeks, Tehran’s leaders have stepped up their defiance of the latest US and EU sanctions against the regime, which include an embargo on the imports of oil from Iran.

Iran has repeatedly argued such sanctions will not cripple the country’s economy nor disrupt its nuclear programme. But despite the claims, western sanctions have already wreaked havoc on the Iranian economy, sending the national currency tailspinning, making dollars hard to come by and forcing ordinary citizens to rush to stockpile staples.

The oil embargo against Iran will only show its full impact in July when measures come into effect in full. Iran relies on crude sales for 80% of its exports revenue, bringing most of the foreign currency into the country.

In reaction to the sanctions, Iran has also resorted to sabre-rattling and threats to close the strait of Hormuz, a vital passageway in the Gulf where one-fifth of the world’s oil passes in tankers.

Despite the clarifications, many Iranian news agencies, including Fars, which has an affiliation with the country’s powerful revolutionary guards, remained adamant that Iran had cut off oil exports to the EU.

The contrast highlights a power struggle at the heart of the Iranian regime between the government and allies of the president, Mahmoud Ahmadinejad, on one side and supporters of the country’s supreme leader, Ayatollah Ali Khamenei, and his revolutionary guards on the other. Many analysts believe conservatives close to Khamenei have attempted to undermine Ahmadinejad’s foreign policy with regard to his dealings with the west.